The Streets Are Paved With Silicon Money Dot-Com Dating Game

Quietly and without much notice over the past year, the newly rich entrepreneurs of Silicon Alley and the city’s political leaders have been forging a relationship that could soon shake up the city’s political structure. In unpublicized trade group meetings, low-key office get-togethers and informal lunches, Silicon Alley moguls and New York City politicians have been introducing themselves to each other and sketching out a new exchange of money and access. They want to work together, much as Wall Street and the real estate industry have long been deeply involved in the city’s political affairs. It’s all part of the story of how the whiz kids who built New York’s Internet firms are emerging from their SoHo lofts to join the ranks of the city’s elite.

The Silicon Alley millionaires and the politicians-including Senator Charles Schumer, Representative Carolyn Maloney, City Public Advocate Mark Green and City Comptroller Alan Hevesi-sense that they need to get to know each other, even though they are not sure yet what exactly they can do for each other. Nonetheless, they are courting each other. The politicians smell a new source of money, and the entrepreneurs have discovered a time-honored fact of city life: friendly politicians help get things done.

“We’re all beginning a dating game, and it’s still early in the relationship,” said Mr. Green of the Internet executives he has met in the last year. “We’re dealing with people who are so young and inexperienced in the public realm that they don’t quite appreciate the impact, both political and economic, that they can have on our civic and business lives.”

“It’s as if the entire political world has discovered Silicon Alley all of a sudden,” said Fred Wilson, managing partner of Internet venture capital firm Flatiron Partners. Among the political events he has attended was a Silicon Alley luncheon hosted in December by Ms. Maloney at the posh “restaurant with no name” at Sullivan and Spring streets. Though Ms. Maloney’s luncheon wasn’t a fund-raiser, Mr. Wilson suspects that politicians have dollar signs in their eyes. “It’s clearly related to money,” he said. “You wonder how many of these politicians would care about [Silicon Alley] issues if it wasn’t a constituency that didn’t have political power from wealth.”

One of the clearest signals yet that Silicon Alley has become a force in New York politics is Doubleclick Inc.’s hiring of Josh Isay, Mr. Schumer’s former chief of staff, to be its full-time political liaison. Mr. Isay, who will turn 30 this month, started work on Jan. 3. He will be based in Washington, D.C., but he said that one of his priorities will be to work with the New York Congressional delegation.

Since graduating from Washington University in St. Louis, Mr. Isay, who grew up on the Upper East Side, has worked solely for New York politicians-first for Robert Abrams’ failed 1992 Senate campaign, then for Mark Green, who at the time was New York City’s Commissioner of Consumer Affairs. After working on Mr. Green’s race for public advocate, Mr. Isay went to work for Mr. Schumer as his press secretary. When Mr. Schumer was elected to the Senate, Mr. Isay was promoted to chief of staff.

It was a meteoric rise, a solid foundation for any young political operative’s career. After Mr. Schumer won his 1998 Senate race, however, Mr. Isay told him that he wanted to move on. He was offered jobs on Al Gore’s presidential campaign and Hillary Clinton’s Senate campaign. But instead of taking another political job, Mr. Isay, like so many other people in their 20’s and 30’s these days, couldn’t resist making a dash for the Internet. So he took a job as the director for public policy and government affairs for Doubleclick, by far the largest and most established Silicon Alley company.

“It’s a fascinating business and really an exciting time to be a part of it,” Mr. Isay said of his move to the dot-com realm. “I wanted to be part of the revolution.”

Mr. Isay represents a new direction for Silicon Alley. While the more established companies out West in Silicon Valley have gotten more and more involved in lobbying, legislation and the gentle art of making campaign contributions-spurred on by such issues as the Justice Department’s antitrust suit against Microsoft Corporation-their younger cousins in New York have remained aloof from the political process. Mr. Isay is the first person hired by a New York Internet firm solely as a political go-between.

Though he calls himself a gadget fiend, Mr. Isay is a novice in the Internet world. What he brings to Doubleclick is his knowledge of how politicians talk and think. For example, when he discusses the Net, he does so in terms of economic growth and job creation. “My role is to make sure that the Internet world doesn’t see the government as a negative and that the government sees the Internet as a fuel to economic growth,” he said. “Elected officials want to be at the cutting edge, not Luddites, and most will be cutting edge in the not too distant future.”

Mr. Isay actually met his new boss, Kevin Ryan, the president of Doubleclick, when Mr. Ryan met with his old boss, Mr. Schumer, to discuss the constraints that Internet companies are facing in New York City. Mr. Isay and Mr. Ryan hit it off.

Mr. Schumer said he was pleased that Mr. Isay took the Doubleclick job. “I thought this was better than Clinton or Gore,” the Senator said, adding that he considers Silicon Alley “the future of New York.” Earlier this year, Mr. Schumer had breakfast with a dozen or so Silicon Alley executives. “I went to the first meeting, and I would say half the people were worth tens, no, hundreds of millions of dollars, and I asked them two questions: No. 1, ‘Do you guys ever wear ties?’ and No. 2, ‘Do you let anybody over 35 into this business?'”

Mr. Schumer said dot-com executives still have a lot to learn about what he does. “Knowing that these people are entrepreneurs and busy, but often run into problems, I wanted to offer my help to just say, ‘When you’re running into any level of governmental problems, call us.'” Then he added, “They’re not of the age or the generation that understood that government could be there to help.” In particular, he said, he is planning to introduce legislation that would address privacy concerns on the Web, curtail the trend of patenting widely used business models on the Internet and expand the number of visas available to immigrants with advanced computer skills. Mr. Schumer said he also plans to work with Bell Atlantic officials on Silicon Alley firms’ longstanding complaints about their troubles in getting their offices wired for high-speed Internet access.

Mark Green, who will become Mayor if Rudy Giuliani wins in the 2000 Senate race and is an all-but-declared candidate for Mayor in 2001 if Mrs. Clinton wins, has been building political support in Silicon Alley. He has lately been floating an embryonic campaign theme embracing the local Internet economy. “In the 1990’s we’ve had a safer city,” Mr. Green said. “Now let’s build on that in the next decade and have a smarter city.” Mr. Green’s smarter city would include support for Silicon Alley businesses-by abolishing city sales tax on computer purchases, for example. “As a potential candidate for higher office, the smarter city is my goal.”

In describing what he calls his “informal advisory board,” Mr. Green recently ticked off a who’s-who list of Silicon Alley executives he met with this past year: Kevin Ryan, president of Doubleclick Inc.; Gene DeRose, chief executive of Jupiter Communications Inc.; Kyle Shannon, a founder of Agency.com Inc.; David Shaw, head of D.E. Shaw & Company and founder of Juno Online Services Inc.; Josh Harris, chairman of Pseudo Programs Inc.; Jack and Murray Hidary, founders of Earthweb Inc.; Lara Stein, former head of IXL Enterprise Corporation’s New York office; Andrew Rasiej, chief executive of Digitalclubnetwork.com.

Mr. Green has been seeking financial support from Silicon Alley as well. Mr. Colonna organized a fund-raiser on Dec. 7, which many of the members of Mr. Green’s informal advisory board attended. (Mr. Colonna was asking for $1,000 a head.) Mr. Rasiej, who learned his politics as head of the New York Nightlife Association before he started his own Internet company, acted as a guide that night for the Internet moguls in attendance, whispering into their ears about how to deal with the politicians.”If you’re going to go through the process of having an event, everyone should get something out of it,” Mr. Rasiej said. “I just assert myself.”

Mr. Rasiej has no illusions about the political naïveté of his colleagues. “Ninety-nine percent of our industry has no clue about the structure of government in this city,” he said. The reason for that, he said, is that most venture capitalists and entrepreneurs don’t think that the government holds either a carrot or a stick. “There’s been no incentive for people in Silicon Alley to get involved in politics,” he said, “because there’s no clear pay off or clear threat.”

Silicon Alley wealth is even trickling down to City Council races. Alan Jay Gerson, an attorney at Kelley Drye & Warren and former chairman of Community Board 2 who is running in Council District 1 in lower Manhattan, is courting the support of the Internet industry as well. On Dec. 9, Mr. Gerson sent out a memo to potential Silicon Alley supporters entitled “Silicon Politics,” which laid out 11 Internet issues he supports-ranging from expediting the wiring of buildings for high-speed Internet access to streamlining the city permit process and launching an “Internet Loves New York” public relations campaign. Mr. Gerson wrote, “I am determined to serve as the Council’s foremost advocate for the public policy needs of our city’s diverse array of new media, Internet and technology enterprises.”

In January 1999, when Mr. Gerson was still a community board chairman, he organized one of the first public discussions of Silicon Alley’s concerns about doing business in New York City. The sparsely attended conference in the Council’s chambers in City Hall was moderated by himself and Jason McCabe Calacanis, the editor of The Silicon Alley Reporter , with a panel of Jack Hidary, Mark Bell, chief executive of Globix Corporation, Gene DeRose, Andrew Rasiej and Josh Harris-all worth millions and not the type of people you expect to find on a panel with a community board chair. But this was before politicians were really taking notice of the Internet moguls in their own backyard. The only other politico to attend was Kathryn Freed, the Council member whom Mr. Gerson hopes to replace when term limits prevent her from serving after 2001. And Ms. Freed left the conference early.

“That was the quintessential example of how naïve our industry is about city government,” Mr. Rasiej said recently. “The event was very poorly organized. No City Council members attended. Freed walked in, made her speech and walked out.”

Still, the conference had an effect. For one, Mr. Gerson is now seeing his political fortunes tick upward. “I think it’s a political coming of age for Silicon Alley that we’re beginning to see,” Mr. Gerson said. “There is a realization on the part of the folks in the business that public policy does matter, that it does have an impact on their future in this city.”